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How do you calculate holiday top up from furlough?

To calculate top up holiday pay from furlough do you treat furlough as over calendar days?

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When calculating holiday top up pay for an employee on furlough do you treat fulough as calendar days per month or the number of working days?  I know furlough is supposed to be calculated according to the number of calendar days in the month, but to use this calculation when determining the top up pay from furlough pay to holiday pay seems incorrect, the top up seems to be too much.  For example,  when calculating daily pay I base it on the number of working days in that month.  May, for example, for a 5 day working week, Monday to Friday, has 21 working days.  So to calculate one day's normal pay I would divide the monthly salary by 21.  For top up from furlough for one day is it acceptable to us this same method, ie., divide a month's furlough pay by the number of working days, 21, and subtract that figure from the daily pay arrived at by the above method to calculate how much the top up to holiday pay should be?  Thanks

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By SteveHa
26th May 2020 08:39

The furlough pay and holiday pay are different calculations, based on differing legislation. You can't align one with the other.

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By tltodman
26th May 2020 10:03

I'm topping up based on 20% their contractual daily pay (annual salary/260 for 5 days a week person or including overtime if that's relevant).

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Replying to tltodman:
By SteveHa
26th May 2020 11:20

That will give the incorrect result. Imagine someone on £12,000 per annum, and in May is paid 80% of salary whilst furloughed.

Furlough pay = £12,000/12 x 80% = £800.00

This works out at a daily rate in May of £800.00/31 = £25.81

A normal day's pay = £12,000 / 260 = £46.15.

Therefore, top up for each day's holiday should be £20.34. This is clearly > 20%.

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Replying to SteveHa:
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By tltodman
26th May 2020 12:10

Fixed salary staff are receiving 80% of normal monthly pay which is based on 260 days. So I think it is reasonable to top up 20% also based on 260 days.

Furlough pays them for 7 days a week but those 7 days are in lieu of 5 contracted days' pay. I don't think the plan was ever to pay more than they would have ordinarily received. You wouldn't top up 7 days pay for a week's holiday taken during furlough just because furlough pay is calculated daily. And if I only topped up 5 days using your calculation they'd receive extra money, over a normal week's pay, at the weekend.

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Replying to SteveHa:
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By MarkKing
26th May 2020 12:07

It will be greater than 20% but why is that wrong?

The top up would only be 20% if daily rate for furlough and holiday pay were on the same basis, which they are not. I would expect to be having to top up more than 20% to count a day as holiday.

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Replying to MarkKing:
By SteveHa
26th May 2020 12:25

I didn't say it was wrong. It just demonstrates the irrational results that can result from the, frankly stupid, CJRS calculation compared with normal calculations.

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Replying to SteveHa:
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By MarkKing
26th May 2020 12:31

Sorry I took your opening line to imply you thought it was the wrong thing to do.

Yes the results are ridiculous in quite a few situations given nobody uses calendar days for anything in payroll.

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Replying to MarkKing:
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By Barbara G
26th May 2020 17:19

The 7 day week calculation is used for SMP SPP calculations. Thanks everyone for all your replies. I went with the divide both furlough and monthly salary by the number of working days in the month. When calculating partial monthly payments we would use the divide the month by the number of working days, multiplied by the number of days actually worked. It gives a fairer result for employees starting or leaving part way through a month. I had been trying to calculate the top up required for a furloughed worker to receive holiday pay for May. Taking into consideration the increase in the minimum wage after calculation of furlough I couldn't just top up furlough by 20 % otherwise the employees could have been underpaid. I just went with the divide furlough by 21, which is the number of working days in May. I also divided the normal salary (including minimum wage increase) by 21, subtracted the furlough and paid the difference for holiday top up. It seemed to work out fine when I double checked by multiplying up to a full month. There's probably no right or wrong way to do it and thankfully this furlough lark won't last forever, or else us payroll processors'll be throwing in the towel. Thanks everyone

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Replying to SteveHa:
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By PandoraSleeps
26th May 2020 17:46

The correct calculation to use is to work out holiday pay in the normal way and then compare to furlough pay on calendar days, as explained by SteLacca. It is not logical but it is what the law says.

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By tom123
26th May 2020 10:43

Ultimately you know what you did actually pay for the month under furlough.
You also know what you would have paid for the month under the contract of employment.

Divide the difference by your usual working days to give the daily top up you owe.

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